Asymmetric dominance or decoy effect

Asymmetric dominance or decoy effect is an interesting psychological phenomenon used in marketing by which customers tend to make irrational purchase decisions depending on the choices they are shown. If we have options A and B, and customers would rather A, it is possible to include a third option (the “decoy”) that will be similar to B but clearly disadvantageous. When C is included, customers prefer B. We can see it in the following specific example, taken from a real experiment:

Small popcorn: $3

Big popcorn: $7

In this scenario, customers picked the small popcorn. Then a new option, the decoy, was introduced.

Small popcorn: $3

Medium popcorn: $6.50

Big popcorn: $7

When faced to this new set of options, the customers began to choose the big popcorn. The asymmetric dominance or decoy effect happens because for us it is difficult to make decisions between alternatives that have several points to consider (small or medium popcorn), but when we find a clear advantage between two options (medium or big popcorn), that catches our attention. Even when the decoy is never chosen, its inclusion affects the result. Here we have another example:

Online newspaper subscription: $5

Paper newspaper subscription: $15

Paper newspaper subscription (+ online edition for free): $15

In this case the second option seems irrelevant, but in fact it makes the most expensive product more attractive.

Keeping in mind that the asymmetric dominance or decoy effect is a psychological bias, it works not only for advertising but every time we make any kind of choice. For instance, it is possible to make a person look more beautiful just by putting him next to a “decoy” who is similar but less attractive.